Order 2012-2-1

Served: February 1, 2012 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 1st day of February, 2012

Application of

 THE YELLOWSTONE MOUNTAIN CLUB, L.L.C.

for an exemption pursuant to 49 U.S.C. § 40109 from the 

provisions of 49 U.S.C. § 41101 

 DOCKET DOT-OST-2011-0139

ORDER GRANTING EXEMPTION

Summary 

By this order, we grant an exemption from 49 U.S.C. §41101 and applicable Department 

regulations to The Yellowstone Mountain Club, L.L.C. (“Yellowstone”) to the extent necessary to 

permit it to engage in indirect air transportation, subject to conditions.

Background 

By application dated July 31, 2011, Yellowstone requested an exemption from the requirements of 

49 U.S.C. §41101 and certain sections of the Department’s economic regulations to the extent 

necessary to permit it to conduct indirect interstate air transportation of persons and property. 

Yellowstone is the proprietor of a private ski and golf community known as “Yellowstone Club.” 

The company was formed in 1997 and reorganized in 2009 as a result of the Chapter 11 bankruptcy 

filing of its original owners. According to the company, Cross Harbor Capital Partners, LLC 

(“Cross Harbor”),1 and a group of Yellowstone members, together with Discovery Land Company 

(“Discovery Land”),2 purchased the community out of bankruptcy in July 2009.3 

 

1 Cross Harbor is a Boston-based investment management company.

2 Discovery Land is a Scottsdale, Arizona-based developer of golf and residential resort properties.

3 Ownership of Yellowstone is divided as follows: Yellowstone is owned by YC Holdings, LLC (“YC 

Holdings”), a Delaware limited liability company, and several institutional investors and club members. YC 

Holdings is a joint venture between Discovery YC Investors, LLC, owned by Discovery Land, and a holding 

company owned by Cross Harbor; it is also owned by CHYC Manager, LLC, which acts as a manager of YC 

Holdings’ interests. 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION
2

Yellowstone proposes to contract with one or more U.S. direct air carriers to provide air 

transportation to its members between Bedford, Massachusetts; White Plains, New York; North 

Philadelphia, Pennsylvania; Los Angeles, California; and/or the San Francisco California Bay area, 

on the one hand, and Bozeman, Montana, on the other hand, where the members maintain vacation 

homes at Yellowstone Club. Yellowstone Club, located in the Rocky Mountains near Big Sky, 

Montana, is a 13,600 acre members-only resort. Members own home sites limited to 864 

properties,4 paying sizable initiation fees and annual dues for membership in Yellowstone. 

Additional services are made available to its members and are billed to their individual membership 

accounts. 

According to Yellowstone, the isolation of the community and the limited air transportation 

available to its members living in the Boston/New York/Philadelphia, Los Angeles and San 

Francisco areas, makes access by air to the community less convenient than many other locations in 

the United States. To address these issues, Yellowstone offered its members more convenient air 

transportation to their vacation homes and arranged with Aerodynamics, Inc. (“ADI”), in December 

2009 and Swift Air, LLC (“Swift”) in October 2010, to perform a limited number of charter flights 

linking Bozeman, Montana, with three East Coast points where a concentration of its members 

reside, Bedford, Massachusetts; White Plains, New York; and North Philadelphia, Pennsylvania.5 

The Department, by letters dated December 11, 2009, and October 22, 2010, granted waivers to 

ADI and Swift, respectively, from the “affinity (pro rata) charter” rule (14 CFR 212.5) authorizing 

each to provide limited charter flights on behalf of Yellowstone. The flights were operated in 2009 

using one 120-seat A319 aircraft and in 2010 using a 68-seat B737-400, with schedules built around 

peak travel times, particularly holidays and three-day weekends.

Yellowstone is submitting the subject application for an exemption so that it may arrange air service 

for its members (acting as an indirect air carrier) on a more frequent basis than what it previously 

arranged with ADI and Swift. In order to resolve any issues about any service it may choose to 

operate under this proposal, Yellowstone asks that it be exempted from the certification 

requirements of 49 U.S.C. §41101 to the extent necessary to permit it to operate as an indirect air 

carrier. Yellowstone further requests relief from the relevant portions of 14 CFR Part 212 and any 

other provision of the regulations to the extent necessary to permit it to provide the services 

described herein. Specifically, Yellowstone requests an exemption from the specifications of 

particular types of charters set forth in §212.4, the rules governing group formation and membership 

eligibility in §212.5 should these operations be deemed “pro-rata” or “mixed” charters, the 

provisions governing the protection of customer’s payments in §212.8, and the Public Charter 

provisions of 14 CFR Part 380.

In support of its application, Yellowstone states that the proposed flights are identical to those 

operated under waivers granted to ADI and Swift and that the flight schedules will vary by season. 

The company anticipates using Swift’s aircraft or similar aircraft during the heavy travel season 

and, when demand is low, contracting for aircraft with fewer than 60 passenger seats . In addition, 

Yellowstone states that flights will be restricted to its members who specifically enroll in the flight 

 

4 Current membership at Yellowstone is 313 members. The maximum number of memberships will be 

864, one for each home site, plus up to 150 “national” members who do not own real estate in the 

community, but who are permitted to participate in Yellowstone Club’s membership.

5 Yellowstone states that while North Philadelphia was added as a point in 2010, to date, no flights have 

taken place.
3

program, their families, and their invited guests. The company anticipates limiting enrollment in 

the flight program to 350 members, which includes Yellowstone’s management. Members will not 

be charged per flight; instead, participating members will pay annual dues, which will be assessed at 

different levels depending on the number of flights a passenger uses.6 The flights will not be held 

out to the public, and participants will be solicited from Yellowstone members and prospective 

members, who may be invited to use the charters as guest of a participating member. Yellowstone 

claims that no purchase, trade, or other form of compensation from a guest is permitted. 

Further, the company asserts that the relief requested is similar to the exemption granted by the 

Department to Kona Associates, L.L.C. (“Kona”),7 which permitted the association to offer air 

transportation to its members between Oakland, California, and Kailua Kona, Hawaii, where they 

owned vacation homes in three exclusive communities.

No answers opposing Yellowstone’s application were filed and no special issues regarding the 

applicant have come to our attention.8 Under these circumstances, we propose to decide the issue 

of the applicant’s requested exemption from certain statutory and regulation requirements on the

basis of the written record.

Decision 

After careful consideration, we have decided to grant Yellowstone the requested exemption from 

49 U.S.C. §41101 and 14 CFR Parts 212 and 380 of the Department’s regulations to the extent 

necessary to enable it to engage in the transportation services and operating arrangements described 

in this order. 

49 U.S.C. §41102(a)(2) provides that any person who engages directly or indirectly in air 

transportation is deemed to be an air carrier. Any air carrier holding out or providing air 

transportation must hold a certificate of public convenience and necessity from the Department 

under 49 U.S.C. §41101 or an exemption from that statute. (See, e.g., 49 U.S.C. §41109.) In the 

contractual arrangements that Yellowstone describes in its application, Yellowstone is acquiring 

access to aircraft and air services on behalf of its community members, as well as marketing those 

air services to community members. In effect, Yellowstone is holding out and selling air 

transportation to its community members through membership fees and dues, which would be used 

to pay for air transportation. Under these circumstances, Yellowstone is engaging in a type of 

indirect air carrier activity for which authority is required.

 

6 Yellowstone states that it expects the dues to cover the cost of the charters. However, the company does 

recognize that increases in charter costs may require increases in dues or supplemental fees charged to 

members to cover the increases. Yellowstone proposes to estimate each member’s contribution in advance 

and then periodically, or at the end of the season, calculate the costs, and if necessary, adjust the 

contributions going forward.

7 See Order 2004-8-8.

8 On August 4, 2011, the City of Philadelphia filed a comment in the public docket, not objecting to the 

application, but to the use of the North Philadelphia Airport (PNE) or the kind of scheduled passenger charter 

service described in the subject application. The City of Philadelphia states that PNE is not a certified airport 

within the meaning of 14 CFR Part 139 and does not have the facilities to accommodate commercial air 

carriers.
4

We believe that Yellowstone has shown that the grant of an exemption to implement the 

arrangement described above is in the public interest, provided certain limited conditions are 

observed. As described in Yellowstone’s application, its proposal would provide additional service 

options to community members, the pool of potential individuals eligible to participate is narrowly 

defined and is not expected to exceed 350 members, there will be no advertising, mailings, or mass 

solicitations to the general public about the services, neither the memberships nor any seat on the 

aircraft may be sold to a third party, and the direct air transportation will be provided by a U.S. 

certificated air carrier under a long-term contract. The aircraft to be used for providing the air 

transportation will be on the air carrier’s operations specifications and all of the flights will be fully 

under the operational control of the direct air carrier. Furthermore, any additional charters with 

other groups or individuals would be provided in full accordance with Department regulations. 

We are not prepared, however, to grant an open-ended exemption to Yellowstone for its proposal. 

In all respects, the exemption granted by this order is limited to the transaction described above with 

respect to the aforementioned city-pair markets. In the event that Yellowstone desires to expand the 

arrangement beyond that described above, especially with respect to the maximum number of 350 

participants, the use of additional aircraft beyond the single aircraft proposed here, or service to 

additional cities, it must first obtain approval from the Department. In addition, Yellowstone will 

be required to use a U.S. certificated air carrier. Since the number of potential individuals eligible 

to participate is limited to 350 members and each participant will be a member of Yellowstone, we 

are willing to waive any escrow requirements that would otherwise be applicable to Yellowstone as 

an indirect air carrier, provided that adequate notice is given by Yellowstone to each member or 

potential member of their rights and responsibilities with respect to the air transportation to be 

provided, including their rights, if any, to refunds of amounts paid. Lastly, Yellowstone must meet 

all applicable Transportation Security Administration requirements. With these conditions, we find 

no basis to be concerned that the arrangement proposed with respect to the members of the 

Yellowstone Club would contravene any Department policies regarding licensing or consumer 

protection or would otherwise be contrary to the public interest.

We do not, however, believe it to be in the public interest similarly to exempt Yellowstone from our 

requirements to the extent it desires to arrange charter flights on behalf of other entities or 

individuals. Yellowstone does not need such an exemption so long as it acts either as the agent of 

the air carrier, as it proposes in its filing, or of the customer. Moreover, Yellowstone has not made 

an adequate showing why it is in the public interest to exempt it, and any direct air carrier with 

which it may contract, from our rules designed to protect purchasers of charter transportation, such 

as our rules requiring signed contracts and financial security protection for charter payments found 

in 14 CFR Parts 212 and 380. 

ACCORDINGLY:

1. We grant The Yellowstone Mountain Club, L.L.C., an exemption from the requirements of 

49 U.S.C. §41101 and applicable economic regulations of the Department to the extent necessary to 

permit it to engage in indirect air transportation, as described above, provided that The Yellowstone 

Mountain Club, L.L.C., meets the conditions described above.

2. We reserve the right to amend, modify, or revoke this authority at any time, in the public 

interest, without notice or hearing.
5

3. The Yellowstone Mountain Club, L.L.C., must obtain approval from the Department, as 

described in this order of major changes in the program, including, but not limited to, additions of 

city-pair markets, or additions to the number of individual participants beyond 350, or the use of 

more than one aircraft under this exemption.

4. We will serve a copy of this order on the persons listed in Attachment A.

BY:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

An electronic version of this document is available at:

http://www.regulations.gov
Attachment A

SERVICE LIST FOR

YELLOWSTONE MOUNTAIN CLUB, LLC

MARK W ATWOOD

COZEN O’CONNER

THE ARMY AND NAVY CLUB BLDG

1627 I STREET NW

WASHINGTON DC 20006

PETER LYNCH AGC-300

ASST CHIEF COUNSEL FOR ENFORCEMENT

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

ANNE SUISSA RTS-42

OFFICE OF AIRLINE INFORMATION

DOT/RITA/BTS E-34

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590